Written evidence submitted by SevernTide Community Power Limited (REW0015)
I am one of four founder directors of SevernTide Community Power Limited.(STCPL). STCPL is a Community Benefit Society formed in 2016 specifically to progress the prospective development on a Mutual basis of a Severn Barrage across the Severn estuary.
The Mutual concept emerged following the 2013 DECC Select Committee Report on the Hafren Power Severn Barrage proposal. During its formative first two years it has investigated prospective financial and delivery structures. We have also tracked the progress of the proposed Swansea Tidal Lagoon project noting the difficulties that project has encountered with apparent UK government renewable energy policy. Despite the positive Hendry review that project has effectively been dispatched to the long grass, in much the same manner as the Hafren Power barrage project.
This submission describes the background to barrage proposals in the Severn Estuary and highlights an innovative new proposition that is presently being considered. This new proposition is being considered following the 2013 DECC Select Committee Report recommendations on the Hafren Power proposals..
Background
The Severn Estuary has been recognised for decades as a potential location for capturing the power of the second largest tidal range in the world. The principle of constructing a barrage across the estuary has seen many research studies and proposals.
However until 2010 these proposals had been based on a so called “high head” barrage, creating a tidal lake between points around Lavernock in South Wales and Brean Down in Somerset. This approach would only generate electricity on the ebb tide similar to the well proven La Rance Barrage in France.
This type of barrage configuration has received much criticism from environmentalists and others being both damaging to the environment and inefficient. This structural configuration was effectively shelved in 2010 following a UK Government study undertaken by DECC.
In 2010, and in response to this study and the 2010 Severn Embryonic Technologies Scheme (SETS) a group of investors and industry experts came together under the Hafren Power banner to review the history and develop an innovative and creative new approach. The project was based on a very low head design ”VLH” and an emerging new “low head” concept turbine technology.
This new technology was being developed by Rolls Royce and Atkins. This new concept turbine replaced the traditional “bulb” turbine technology in the original Hafren Power ”HP” thinking.
The HP proposal was developed and in 2013 HP was invited to present its in principle proposals to a Parliamentary Select Committee on Energy and Climate Change (DECC). The Committee was chaired by Tim Yeo and its inquiry was widely discussed and commented on and the HP proposals became the subject on significant scrutiny and criticism in terms of its financial structure and lack of environmental due diligence.
The Committee whilst acknowledging the design merits felt unable to recommend the proposal without significant further detailed information and a radical change in the financial structure.
In response to the Select Committee Report the government later that year stated that it was prepared to further consider the Hafren Power proposal once the concerns of the Select Committee were addressed.
The New Proposal.
It was clear that the financial structure of the HP proposition was not acceptable to the government if they were to support the selling price of the electricity generated. In 2007 the Sustainable Development Commission under Jonathan Porritt suggested that a sustainable energy infrastructure scheme such as the Severn Barrage should be structured on a mutual basis, This was also apparent from the Select Committee inquiry into the HP proposal.
Accordingly a revised structure was investigated and in November 2016 members of the HP team met with Centrus Advisors and Pinsent Mason to discuss potential revised structures. As a result of this meeting and further discussions a concept evolved for a mutual structure based on the principles of a Community Benefit Society (CBS) . Discussions commenced with the Financial Conduct Authority (FCA) who are responsible for regulating such mutual societies. Following much discussion and negotiation a new company SevernTide Community Power Limited (STCPL) was formed and registered with the FCA in May 2017.
In October 2017 the Board of STCPL entered into an agreement with HP to secure the agreements and use of the technology developed by that team and use what was deemed appropriate in a revised Severn Barrage proposal, structured on a mutual basis.
For the past 18 months the board of STCPL have been working on further developing the financial structure and most recently working on bringing together a credible delivery team.
A major concern of the STCPL Board is the apparent reluctance of the UK Government to bring Tidal Energy into their Renewable Energy Policy framework. This situation is inhibiting meaningful discussions with prospective partners including major engineering companies, financial consultancies, banks and prospective overseas Sovereign Funds that have shown some interest in the funding of what would be one of the largest infrastructure projects in the UK.
The STCPL Board feel that this Welsh Affairs Select Committee should seriously investigate the reluctance to put Tidal Energy into the UK Government’s policy on Renewable Energy. A recent National Needs Analysis study commissioned by the National Infrastructure Commission issued what appears to be misleading data on the costs of Tidal Power compared to other forms of renewable energy and nuclear.
The proposed Severn Barrage would be one of the largest infrastructure projects in the UK and will have a positive economic impact whilst developing an innovative new technology, creating employment and potentially providing 7/8% of the current electricity needs of the UK.
The structural ideas being developed envisage the cost of the construction being returned to investors over a 35 year period. 35 years would also be the period that would be required for the Contract for Difference (CfD) price guarantee to be held in place. The underlying asset created would be returned to public sector ownership after the payback period, with a management and operating company in place
The Barrage would then continue to generate low cost, carbon free electricity long into the future subject only to repairs, maintenance and scheduled replacement of the Turbines.
It is anticipated that an additional advantage a Severn barrage as now proposed would be to enhance flood protection for the Somerset levels, where a barrage across the River Parrett is also being considered for that purpose.
It is also envisaged that a small percentage of the significant revenues generated in this period would be hived off into a mutual fund administered by STCPL to be used for the benefit of Environmental Groups, Reinstatement and Establishment of Wetlands, Local Authorities and other potential partners around the Severn Estuary.
As stated earlier the Board of STCPL and prospective partners and investors in the project hope that this Welsh Affairs Select Committee Inquiry into Renewable Energy in Wales will get to the bottom of this Governments apparent reluctance to put Tidal Energy projects onto its Renewable Energy agenda.
This lack of Central Government and BEIS interest and a void in Renewable Energy policy support for Tidal projects, has dissuaded prospective partners and investors from progressing interest. The UK is surrounded by water and has some unique tidal patterns in its waters. There is the capability of developing world leading Tidal Power Technology in the UK which could help solve the future shortages of the supply of electricity against forecast demand increases over the next 25 years.
We await with interest the outputs from the Inquiry
P J Morgan
4 September 2018